Exhibit 7, for Lowe’s

??S? STUDI?S IN FIN?N??:V?LU? LIN? ?UBLISHING
1. Complete and compare an analysis, simila rto that in Exhibit 7, for Lowe’s. (5 Marks)

2.What do the financial ratios in these analysestell you about the operating performance of

Home Depot and Lowes? (4 Marks)

3. Consider how sensitive return on capital isto variations in the forecast assumptions adopted in Exhibit 8. What changes in Carrie Galeotafiore’s
estimates are required to drive the 2002 return-on-capital estimate below Home Depot’s cost-of-cafital estimate of 12.3%? Look
specifically at gross margin, cash operating expenses, receivable turnover, inventoryturnover, an P&E turnover. (4 Marks)

4. What effect does sales growth have on return on capital? Explain your findings. (3 Marks)

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